2022-09-18 21:18:15
7 Common Binary Options Trader Mistakes
The binary trading arena can be a rewarding and confusing place at the same time; especially for beginners. So let's take a look at ten common mistakes people make and how to avoid them.
1. Trade in emotions
It's mentioned first because it's a common trap. Psychology of Binary Options Trading: When greed or anger gets the better of logic, you can suffer big losses. One must be analytical and rational; never let raw emotions affect even the smallest trade. If you are upset or worried, it is best to refrain from trading until these feelings subside.
2. Commodities are king
Due to recent volatility, there is a misconception that commodities (and precious metals in particular) are "reliable things". Indeed, what goes up can and will fall. Therefore, the same analytical approach and foresight should be used when considering any commodity item.
3. Narrow portfolio
This is actually in the same vein as the last observation. Either due to lack of experience or comfort, traders often focus primarily on one or two sectors. This can make any portfolio dangerously unbalanced. What's even worse is that due to the very binary nature of these positions, a large fortune can be lost in a short amount of time.
On the contrary, the portfolio should be diversified to outperform any potential risk. market volatility. Thus, a number of sectors (commodities, indices, stocks and currencies) should be selected; a loss in one area can be offset by a gain in another. Simply put, a diversified portfolio is much more likely to generate tangible returns.
4. Sixty second trades will bring in the most money.
Again, this belief is usually the result of an inadequate understanding of the complexities involved in 60 second binary options trading. This is also due to the fact that many low quality sites often promise "quick money".
While short-term trading can indeed lead to capital gains, it can also lead to net losses in seconds (sudden fluctuations in the Forex market would be a perfect example). The point is that wealth rarely builds up within minutes, and if it does, luck should have a significant impact. Thus, it is better to develop an approach that includes a small number of 60-second trades along with more
5. Distribution of the position
There is an opinion that the best way to make a significant amount of money trading binary options is to open multiple accounts on a large number of online portals (and even physical brokers). In fact, this will soon lead to a confusing situation. A trader will most likely not be able to keep track of every account. This is even more important if multiple expiration positions are open.
6. Minimum deposits
Each site will need a certain amount of money to open an account (usually a few hundred dollars or the equivalent). In the beginning it is reasonable to put only a minimum. It sometimes happens that a newcomer invests several thousand dollars in a certain sector and "wins big", but this is more the exception than the rule. This is another example of how greed affects good decision making. Thus, it is best to keep initial deposits low until more experience is gained over time.
7. Excessive zeal
While it is commendable to want to dive straight into the lucrative world of binary trading, experience can only be gained through working knowledge of various trading systems. You need to learn how to use the binary options constructor.
Pay levels must be clearly understood. Perhaps most importantly, the movement of underlying assets (and the reasons for these fluctuations) must be valued. Of course, this will take a little time. However, the fact is that those who approach options trading believing that they will “get rich” from the very beginning are deeply mistaken.
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